The East is Green. Asia is confirmed as “the new Brazil” as project developers head en masse to the friendly receptions in Asian countries — based on energy diversification and rural development opportunities.

Whether you look at financing, mandates or project announcements, there’s no question that the hottest region is Asia — which started slowly in terms of deploying biofuels capacity in some cases over food-vs-fuel or feedstock shortage concerns, but has begun to accelerate strongly as waste-based and aquaculture technologies arrived. In particular we’ve seen algae on the rise, but from crop residues to mallee trees and wine waste, we’ve seen opportunities abound, governments and strategics stepping in, offtakers showing great interest (especially among airlines). In general, a great year for travel agents setting up extended Asian tours in the bioeconomy sector.

Here are the Top 10 developments of the year.

1. Asia is the new Brazil

It’s been quite a year for Asian projects for advanced bioeconomy technologies, and many of the bizdev types that were making the deep south swing to Sao Paulo have added in China, Japan, Indonesia and Malaysia into the mix.

In April, we reported that Verdezyne had negotiated key terms for an investment of $48 million led by Malaysian multinational conglomerate, Sime Darby Berhad. The $48 million financing for Verdezyne was joined by existing investors BP Alternative Energy Ventures, DSM Venturing B.V., OVP Venture Partners, and Monitor Ventures. Individually, Sime Darby was reported to invest $30 million in return for a 30 percent stake in the company, which would give Verdezyne a valuation of $100 million. The funds will be used to accelerate Verdezyne’s technology development in the U.S., and support various collaborative projects with Sime Darby’s newly-formed business unit, Sime Darby Renewables.

Earlier this month, Edeniq announced a Joint Development Agreement with Global Bio-chem Technology Group Limited, to integrate their technologies in a commercial demonstration plant at Global Bio-chem’s facility in the Jilin Province of China. Construction has been initiated on the plant, with a target to produce 50,000 metric tons per year of sugars from corn stover. The two companies not only intend to supply the cellulosic sugars to Global Bio-chem for utilization in its existing sugar-based chemical production facilities, but also plan to develop partnerships with other companies to enable the production of a broad array of biochemicals and biofuels from its sugars. Global Biochem has started construction of a Commercial Demonstration Plant with a capacity of 50,000 mt/yr cellulosic sugars from corn stover, which is scheduled to be completed in 2015

In October, Enerkem announced an agreement with Shanghai Marine Diesel Engine Research Institute to develop a project partnership to jointly build a waste-to-biofuels facility in China. The agreement was signed by Dr. Donghan Jin, President of Shanghai Marine Diesel Engine Research Institute, and Vincent Chornet, President and CEO of Enerkem. This announcement was made in the presence of the Premier of Quebec, Philippe Couillard, as part of the Quebec government’s trade mission in China.

The Digest heard from China in July that Sapphire Energy’s and Sinopec’s algae-derived renewable crude oil project had been selected for the U.S.-China EcoPartnerships program. Details on the project remain sketchy. Clearly, a partnership with the world’s second largest oil company means “fuels” — possibly some chemicals in there. Our understanding is that the two companies are collaborating toward a large-scale farm or farms, subject to the construction of a Las Cruces-sized pilot facility, construction for which would begin in 2015 with a late 2015 or early 2016 complete date.

In July, we heard from Illinois that Elevance Renewable Sciences is announcing a 25:75 collaboration between Elevance and Genting Plantations Berhad — aimed at building a 240,000 MT metathesis biorefinery based on Elevance’s proprietary metathesis technology, and will produce renewable, high-performance olefins and specialty chemicals that can be used in multiple end-product applications, including lubricants, surfactants and detergents. The refinery will be located in the Palm Oil Industrial Cluster (POIC) in Lahad Datu, Sabah, Malaysia.

In August, we reported that Archer Daniels Midland Company joined with CIC Holdings and Chemanex PLC in a joint venture to build and operate a processing facility near Colombo, Sri Lanka, to manufacture bio-based superabsorbent polymers. These products are commonly used in food packaging, personal-care products and various industrial applications. ADM will be the majority owner of the venture and will market the plant’s production of ADM’s BioSAP brand superabsorbents.

2. Strategic and sovereign financing

We’ve seen a trend in international projects coming increasingly to Asia for financing, not just project sites and feedstock deals. Sources? Major strategics include China’s Ex-Im Banks, governments, strategics like Genting, reliance Industries, institutions and more.

In October, BlueFire Renewables received a Letter of Intent from The Export Import Bank of China (China EXIM) to provide up to $270 million in debt financing for its 19 million gallon bioenergy project in Fulton, Mississippi. The companies said they will continue to work together to complete the standard due diligence procedures of the China EXIM bank and meet all credit criteria and condition precedent to reach definitive agreements in order to complete the financing as soon as possible. Once completed, China Three Gorges Corporation and its U.S. subcontractors will begin construction of the Fulton Project.

In May, Ignite Energy Resources secured a $20M grant for the design, construction and operation of a lignite-upgrading plant in Victoria’s Latrobe Valley. The funding, part of the Advanced Lignite Demonstration Program , will allow Ignite to proceed with an $84 million project to demonstrate its unique Catalytic Hydrothermal Reactor technology . The Project will involve the construction of a commercial-scale reactor module in an end-to-end pre-commercial plant, three phases over four years to 2018.

We reported in August that the Digest learned that, according to sources, Reliance has continued with its investment in Algenol and Algae.Tec, but discontinued with Aurora Algae. Continuation with Algae.Tec is easiest to discern, since the Australian development-stage algae company is a public company, and reealed in a note on July 22nd that “Reliance Group has confirmed the conversion of the first tranche of options following the positive progress achieved on the joint algae plant project with Algae.Tec Ltd. 1,833,740 options have been converted at an exercise price of 16.36 cents per share. Reliance hold a further 28,728,607 options following this conversion.”

Earlier this month, the New Zealand Superannuation Fund made a US$60 million equity investment in leading gas fermentation company LanzaTech. The LanzaTech investment is one of a series of ‘expansion capital’ investments made by the NZ Super Fund in recent years, providing capital to privately-owned, early-stage companies that are seeking to grow, but are not yet ready to list on the public markets. “LanzaTech is one of the most exciting companies New Zealand has produced, with significant global potential,” said Nigel Gormly, NZ Super Fund Head of International Direct Investment. “We’re proud to continue the New Zealand connection and to be able to assist in LanzaTech’s ongoing growth.”

3. Algae’s rise and rise

If there’s one feedstock that stands above all across the region, it’s algae. They’re looking into it in East Asia (Accelergy, Sinopec), Southeast Asia (Indonesia and Heliae), South Asia (Reliance Industries and Algenol) and Oceania (Algae.Tec, Muradel, etc), to name a few. Fuel is the most-cited opportunity, but protein and nutraceuticals are on the rise (spirulina has been an established business in China for years).

In July, Heliae announced a joint venture with top Japanese waste management and recycling company, Sincere Corporation, to develop a commercial algae production facility in Saga City, Japan. The joint venture has been named Alvita Corporation, and will combine Sincere Corporation’s operational skill, distribution networks and knowledge of the Japanese market with Heliae’s proprietary algae production technology to supply natural astaxanthin, a powerful antioxidant with broad health benefits, to the growing health and wellness market in the region.

In November, Muradel launched its integrated demonstration plant to convert algae into green crude in Whyalla. The $10.7 million plant will produce 30,000 liters per year and represents the company’s first step toward an 80 million liter per year commercial scale plant.
Murdel’s technology, Green2Black, uses microalgae produced on site, plant biomass, and organic waste in an energy-efficient subcritical water reactor that converts the feedstock to crude oil in minutes.

In August, we reported that algae may have acquired a new application in Australia: cattle feed. Research sponsored by Meat and Livestock Australia and conducted by the University of Queensland was unveiled last week, debuting an on-farm algae growing prototype in Queensland. Lead researcher Professor Peer Schenk said the farm showed algae could be grown easily in Australian conditions without competing for arable land needed for food production. It would also give livestock producers another protein-rich feed supplement during dry times when pasture quality was poor. Growing livestock feed in algae farms also freed up arable land to grow food for people, instead of feed for livestock, Schenk said.

4. Mandates up, down and all around

The news on mandated use of biofuels hasn’t always been positive, but it’s been steady, and generally in a positive, upward direction in Asia as more and more countries move towards 5 and 10 percent standards. Availability of local fuels and feedstocks has often been a sticking point.

In August, Malaysia delayed implementation of its B5 mandate to December rather than July due to slow implementation of 15 blending facilities in Sabah and Sarawak and the federal territory of Labuan. When the policy is implemented, national consumption of palm oil biodiesel will double to about 500,000 metric tons annually.

Earlier this week, the South Korean government has decided to boost the biodiesel blend to 2.5% in August from 2% currently. Plans are for the mandate to rise to 3% by 2018. The Korea Petroleum Association is complaining that complying with the mandate has cost $77.5 million in 2014, will cost $91.2 million in 2015 and $118.7 million in 2018. Most of the biodiesel produced in the country comes from imported palm oil. Production reached 420,000 metric tons last year, just shy of a third of total demand.

In November, a Cabinet note was being circulated by India’s oil ministry proposing a 5% biodiesel blend that could help reduce the country’s fossil fuel import bill while also boosting the local biodiesel industry. The policy would only apply to bulk users such as government agencies and the railroad, however, until the quality of the biodiesel can be confirmed as high enough for public consumption.

In January, the Thai government said it will implement B4 instead of B7 because of less palm oil production than previously expected. Production is now seen at between 800,000 and 900,000 metric tons of palm fruits per month rather than 1 million tons as previously estimated. The new harvest season begins in March when it is hoped that palm production will improve.

Earlier this month, the Philippine Dept. of Energy still expects the B5 policy to be implemented by the end 2015 as planned, up from B2 currently, as part of the country’s energy policy through 2020. The economic impact and technical aspects of the policy change are still under investigation, with the results of a study from the National Economic and Development Authority expected soon.

Meanwhile, the Philippine ethanol blending mandate for the fourth quarter has been boosted 7% by volume to 46,065 cubic meters of domestic product. The notice reached oil companies later than usual but even so, market players didn’t think they would be too impacted because of the availability of local ethanol supplies.

Earlier this month, we reported out of Vietnam that gas stations across Ho Chi Minh City will begin distributing E5 this week, blended with cassava-based ethanol, though some already began last week and had positive feedback from consumers. The government mandate expects Hanoi, Hai Phong, Da Nang, Can Tho and Ho Chi Minh and Ba Ria-Vung Tau and Quang Ngai to also begin selling E5 in December. E5 is currently retailing at about even with non-ethanol gasoline, but the ministries are working to lower costs to boost demand for the fuel. The seven cities combined have a total demand of up to half a million metric tons of ethanol with the E5 blend.

Last month, we reported that the Indonesian government plans to continue rolling out its B10 policy despite the uptake having been slow during the first nine months of the year, when just 1.2 million kiloliters were blended, compared to the 4 million kiloliters required. The blend applies not just to transportation but also to electricity production and industrial use. The B10 policy was introduced in September last year.

5. Aviation continues to build momentum

Aviation has lacked the technology push that’s on in the US, and the airline commitments to offtake agreements that we’ve seen in the EU, but it remains a hot and growing sector for new offtake demand and the outlook is highly positive.

In October, Boeing and Commercial Aircraft Corp. of China opened a demonstration facility that will turn waste cooking oil, commonly referred to as “gutter oil” in China, into sustainable aviation biofuel. The two companies estimate that 500 million gallons (1.8 billion liters) of biofuel could be made annually in China from used cooking oil. Boeing and COMAC are sponsoring the facility, which is called the China-U.S. Aviation Biofuel Pilot Project. It will use a technology developed by Hangzhou Energy & Engineering Technology Co., Ltd. (HEET) to clean contaminants from waste oils and convert it into jet fuel at a rate of 160 gallons (650 liters) per day. The project’s goal is to assess the technical feasibility and cost of producing higher volumes of biofuel.

In August, Cathay Pacific Airways announced that it is the first airline investor in Fulcrum BioEnergy, Inc., a US-based sustainable biofuel developer, as part of the airline’s biofuel strategy and to help it achieve a target of carbon-neutral growth from 2020.
The airline has made a strategic equity investment in Fulcrum, which is a world pioneer in the development and commercialisation of converting municipal solid waste into sustainable aviation fuel or “biojet fuel.” Cathay Pacific also has an option for further investment.

In October, Japan’s Initiatives for Next Generation Aviation Fuels was launched with the aim to produce and supply aviation biofuels in time for the Tokyo Olympics in 2020. Partners in the initiative include the University of Tokyo, Boeing Co., Japan Airlines Co., Nippon Cargo Airlines Co., All Nippon Airways Co., Narita International Airport Corp. and Japan Petroleum Exploration Co. along with government agencies and observers.

In August, Garuda said that it expected to be using an aviation biofuel blend by 2016 comprised of biofuel and avtur (aviation turbine fuel). The aircraft are already equipped to use biofuel and the carrier aims to run a trial flight soon. However, the state-owned carrier’s commitment to supporting the use of clean energy will be highly dependent on the availability of the crude palm oil (CPO)-based biofuel that is currently being tested at state-owned oil and gas company PT Pertamina’s laboratory.

6. The Switcheroo – shifting feedstocks and technology bolt-ons

As new technology has emerged, we’ve seen new feedstocks and bolt-on technologies emerge, creating opportunities for retrofits, some times assisted by government, other times simply driven by the economics. In some cases, growers are seeking new markets.

In August, Benefuel and Felda formed a JV to acquire a 250,000 metric tons per year biodiesel plant in Kuantan Port, Malaysia and will retrofit the plant with Benefuel’s ENSEL technology. The joint venture also includes M2 Capital Sdn. Bhd., a subsidiary of Australia’s Mission NewEnergy, the current owner of the plant. The transaction is expected to close in the fourth quarter of 2014, and the plant is expected to be operational in late 2015.

Also in August, the Thai government boosted the price paid to farmers to cut down rubber trees following a 20% cut in global rubber prices and is encouraging them to instead plant oil palm trees to increase biodiesel production. The plan is to cut down 350,000 rubber trees per year, up from 250,000 trees originally, while expanding oil palm acreage by 25%.

In May, the growers of mallee trees in Australia’s Upper Great Southern region said they feared that despite high hopes in the recently released Airbus/Virgin Australia report hailing the crop as a major opportunity to aviation biofuels, the good news may come too late. Early adopters hoped a commercial opportunity would develop for the oil, but as it didn’t come, some have already left the industry, others are looking at backing out in five years or less, while only a few could stick around for the next 10 years.

In June, news has arrived from Byogy Renewables that it had invested in a strategic partnership with AusAgave Australia, aimed at developing multiple feedstocks to develop low cost sugars for the production of renewable fuels and chemicals. Structured initially as a strategic partnership, Don Chambers, CEO of AusAgave, will join the Byogy team to drive overall global feedstock operations — and, if all goes well, we may find that a merger of the companies may emerge down the line.

7. Sustainability

With a critique of oil palm’s sustainability hurting or slowing market access in the EU and US, there’s been quite a bit of work underway on a workable, broadly accepted sustainable palm strategy.

Last month, the national sustainability program for palm oil—Malaysian Sustainable Palm Oil, MSPO—said that it is set for launch in January as a way to help market the country’s CPO. Ongoing talks for the Malaysia-European Union Free Trade Agreement and the Trans-Pacific Partnership are expected to provide additional export demand, and that MSPO meant to support those exports. Field trials of the standard have already been completed.

8. Waste feedstock projects

Crop-based biofuels not your flavor? Projects using crop residues, and food and industrial waste have been very much on the rise. Earlier efforts associated with carbon monxide and carbon dioxide, generally associated with LanzaTech or Accelergy, have been getting many of the headlines, but cellulosic biofuels and wine waste have been among the other technologies we’ve spotted.

Last month, Brooke Renewables and Hock Lee Group presented a Letter of Intent to the Sarawak State Government marking their intention to invest in the 2G Bioethanol and Bio chemical plant as the first phase of the $1B, 5-year Sarawak Biomass Hub project. The tri-party LOI signed is for the use of Beta Renewables’ Biomass Conversion Technology and Novozymes’ Exclusive Enzymes Solutions in the 1st 2G Bioethanol and Biochemical plant in Brooke Renewables’ proposed Sarawak Biomass Hub project. The LOI strengthens the execution of the proposed Biomass Hub project in Sarawak, as both foreign partners are global leaders that have proven commercial-scale facilities. Beta Renewables are owners for the world’s first commercial scale 2G Bioethanol Plant in Italy and Novozymes is the world’s largest enzyme solutions provider.

In September, researchers at the Swinburne University of Technology and CSIRO, in partnership with the Australia Wine Institute, announced that they have developed a lab-scale technique for converting winery waste streams into fuels or sugar streams for biobased chemicals.
Reporting in the Journal of Chemical Technology and Biotechnology, Swinburne PhD candidate Avinash Karpe used four fungi — Trichoderma harzianum, Aspergillus niger, Penicillium chrysogenum and Penicillium citrinum — to degrade the stream of skins, pulp, stalks and seed that comprise the residues from wine-making. In the experiment, Karpe used a 30-minute heat-based pretreatment for the one-liter scale project, which produced soluble sugars that can be fermented into biofuels or renewable chemicals.

9. Oil price impact

Though the oil price story has been more reported with respect to giant producers in the OPEC orbit as well as the US and Russia, we’ve seen impact already in demend for alternative fuels as obligated parties try to get a hold of cheaper petroleum-based fuels.

Earlier this month, Indian oil marketing companies canceled their buy tenders for 1.2 billion liters of ethanol, saying the falling price of oil has no longer made the ethanol offered by sugar mills viable. When the 1.56 billion liter tender was opened, oil was at $114 a barrel but that has now fallen to $72 per barrel. As mills were not willing to lower the prices offered, and the contracts for 350 million liters were already signed, the rest of the negotiations were cancelled.

10. Australia’s Carbon tax, bye bye

We weren’t huge fans of Australia’s carbon tax, as is widely known — introduced too quickly, with too fast a ramp-up time affording no one a chance to deploy alternative technologies, and with dubious destinations for the proceeds that smacked more of income redistribution than energy transformation. We hope that it comes to be seen that carbon taxes didn’t fail, but carbon tax implementation did. We hope.

At the time the carbon tax was initially passed in 2011, the national newspaper The Australian made reference to the Labor government’s U-turn from the previous elections, when it pledged to voters that it would not introduce a carbon tax. “Seeking parliamentary endorsement for the proposal before securing a popular mandate is an error of judgment voters will find hard to forgive,” the newspaper’s editors warned.

Among reasons for unhappiness? The government said that, under the scheme, household electricity prices would rise $171 per year, with a $78 per year increase in gas prices and less than $50 increases in food prices.